Maddukuri Dhana Raju vs The State Of Andhra Pradesh,
2021 Latest Caselaw 1555 AP

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        HON'BLE SRI JUSTICE D.V.S.S.SOMAYAJULU

WRIT PETITION Nos.955,805, 824, 853, 865, 931, 950,
960, 969, 970, 1032, 1033, 1050, 1064, 1070, 1073,
1076, 1084, 1091, 1094, 1100, 1103, 1144, 1147, 1159,
1204, 1205, 1419, 1423, 1433, 1439, 1443, 1446, 1453,
1454, 1498, 1621, 1626, 1642, 1703, 1740, 1779, 1797,
1798, 1806, 1817, 1832, 1840, 1857, 1862, 1881, 1885,
1948, 1965, 1970, 1978, 1979, 1980, 1992, 2001, 2003,
2005, 2009, 2026, 2029, 2038, 2041, 2190, 2197, 3078,
3091, 3096, 3109 of 2021

COMMON ORDER:
     The petitioners in these batch of Writ Petitions are the

people who are claiming to be paid for supplying materials to

the Panchayat under the Mahatma Gandhi National Rural

Employment Guarantee Act, 2005 (in short "Act of 2005").


     The lead argument was advanced in W.P.No.955 of

2021.


     The Panchayat Raj Department is the main answering

respondent supported by the Gram Panchayat concerned.

Learned counsel for the petitioners relies upon the

earlier orders which were passed in number of writ petitions

of similarly placed petitioners. It is his contention that the

Writ is maintainable and the issue of privity of contract that

is now raised by the respondent State is not correct. He

points out that the petitioners rely upon what is called the

'Fund Transfer Order' (In short "FTO"). This is given, as per

the learned counsel, after the documents are reviewed and

the work done is assessed totally. He points out that the

Government of Andhra Pradesh transfers the funds to the

Panchayat which in turn has to make the payment. As per

him the fact that the fund transfer order is issued, clearly

indicates that the work has been executed and that the

material has been supplied Nevertheless, learned counsel

also points out that in view of the objection raised, he has

also filed copies of the Measurement Book with his rejoinder,

which show the supply of material / execution of work etc.

Relying upon the counter affidavit filed, learned counsel

points out that the respondents have refuted the petitioners'

claim that the work done is undisputed. On the other hand,

they state that in view of the pending vigilance enquiry the

writ petitioners claim is disputed. He points out that the

amount payable to the petitioners is "disputed" because of the

alleged vigilance enquiry and not on the ground that the work

is not done or that the material is not supplied.He argues that

the dispute is not about the individual work perse or of the

quantum etc. Learned counsel for the petitioners points out

that this issue was already considered by the learned single

Judges of this Court in various orders which are annexed to

the Writ Petition as material papers. He mentions that in all

the cases directions were given to complete the enquiry and

make the payment within the time stipulated. Even otherwise

he points out that the memo of the Government is dated

05.05.2020 which stipulated a period of six months for

completion of the enquiry into all the works that were

executed under this the Mahatma Gandhi National Rural

Employment Guarantee Scheme (in short "MGNREGS").

Learned counsel points out that the enquiry should have been

completed by the date the counter was filed and the

information should have been given to this Hon'ble Court. He

also argues that once the State's action in failing to pay the

amount is clear, this Court can entertain the Writ and direct

the payment. Even in the judgment reported in Joshi

Technologies International INC v Union of India1,which is

relied on by the learned counsel for the State, it is pointed out

that money claims are not generally entertained except in

exceptional circumstances. Therefore, learned counsel

submits that he was compelled to approach this Court as

there is gross delay and State inaction coupled with a failure

to pay without valid reasons.

For the StateSri Kiran, learned Government Pleader for

Panchayat Raj, argues that the amount claimed is not

admitted; that the Writ is not a proper remedy and that in the

absence of privity of contract the petitioners cannot claim a

direction as prayed for. He also states that the public law

remedy cannot be entertained at the behest of a person who

supposedly worked for the Panchayat and that the writ is not

the proper remedy. He also argues that the large scale fraud

has taken place in these works and the matters are under

(2015) 7 SCC 728

investigation. Therefore, he submits that legally and factually

the petitioners are not entitled to any relief. Learned counsel

argues that subject to his objections about the

maintainability of the Writ he has made other submissions in

this writ. It is his contention that the judgment reported in

Joshi Technologies case (1 supra) is clearly applicable to the

facts and circumstances. Therefore, it is his contention that

all the writs should be dismissed and no relief can be given to

the petitioners.

For the Panchayat a similar argument is advanced.

This Court after considering the submissions notices

that the fact remains that it is asserted by the petitioners that

they had engaged unskilled labourers and supplied the

material like cement, sand, steel etc., to the 5th respondent.

This fact is not denied specifically and more so by the

Panchayat. The material was supplied for the works under

the Act of 2005. As rightly pointed out by the learned counsel

for the petitioners, this Act of 2005 is a special enactment

with overriding effect over any other Act / Scheme. It is an

employment guarantee scheme that is provided and catered

for under the Act of 2005. Under the scheme of the Act

unskilled manual workers from every household in the rural

areas are encouraged in the rural areas by this Act to do

some productive work, which further benefits the local

Panchayats and the local population by creating sustainable /

enduring assets. It is for this reason that the Central

Government agrees to form a scheme for meeting 3/4thof the

material cost and the State Government shall meet the other

1/4th of the material cost. This Court agrees with the

submission that in order to ensure that the payment to the

people who work or the people who supply the material is not

denied, the scheme provides for a sort of a "guarantee" by

stipulating that the Central Government shall bear 3/4th of

the material and the State shall bear other 1/4th of the

material cost. These factors cannot be lost sight of. The

works to be executed are also specified in the Schedule-I as

the "minimum features". The material component shall be

upto 40% of the project cost. It is also directed that the wage

rate should be fixed for the labour. Therefore, in the opinion

of this Court, the work executed cannot be equated to a

regular "commercial work" executed by a person for the State.

The provisions of the Act make it clear that it is a

welfare legislation meant to create employment / eradicate

unemployment in rural areas and in the process to create

durable assets for rural India. Thus, it is clear that a public

element is involved in these works with State participation

and funding.The "States" presence is therefore all pervasive in

this scheme. The law on the interpretation of welfare

legislation is also very clear. As held in number of cases

including K.H. Nazar v Mathew K Jacob and Others2 case

by the Supreme Court of India "Judges ought to be concerned

with the colour, content and the context of such statutes".

Therefore, in view of the settled law and keeping in mind the

purpose for which the legislation is enacted, this Court has to

hold that there is a public element involved in this and that it

is not a pure case of the State entering into a commercial

contract.

Apart from this when State or State instrumentalities

act in an arbitrary manner or failto act within time the Writ

Court does have jurisdiction to entertain the matter. Even

the case law cited by the learned counsel for the petitioner

supports this to an extent. Besides this Court notices that

there is no method / mode for settlement of disputes provided

for. Section 23 of the Act and Rule 14 of Schedule-I for

example provide for constant monitoring of the works / books

to be maintained etc. Despite this, there is no strict denial of

the exact quantum of work executed.

Coming to the issue of privity of contract, in the

rejoinder that is filed, petitioner relies upon the receipts

issued by the petitioner for acknowledging the receipt of

payment of Rs.21,536/- covered by two FTOs bearing FTO

No.8050419002808 and FTO No.8050419002820. Both the

FTOS pertaining to the works executed in Jagannadhapuram

(2020) 14 SCC 126

Gram Panchayat. The receipt is issued to the

Jagannadhapuram Gram Panchayat, which is the 5th

respondent in this case acknowledging the receipt of the

payment. As mentioned earlier the respondents did not

exactly deny the petitioners assertion that the material was

supplied nor did they plead that the claim is false. Therefore,

on the issue of privity of contract also this Court has to hold

in favour of the petitioners. The State and the Panchayat,

which have received the benefit of the work, cannot also deny

the payment due. Having had the benefit of the work they are

under an obligation to make the payment to the petitioners.

Lastly, there is an issue of the enquiry which has been

pending. In a number of orders, annexed to the Writ

Petition,learned Judges of this Court have directed the

payment.These orders have become final also and the learned

Judges considered a Government Memo dated 05.05.2020

wherein an enquiry was directed to be held to the works

executed under the Act of 2005 and the report was to be

submitted within a period of six months. The six months

period expired in November, 2020. It is to be, noted that the

memo was issued after the Covid pandemic set in and still it

prescribed a period of six months only for completion. Even if

a liberal view is taken, and some leeway is given for the slow

movement of files etc., in the Government by the date the

matters were heard and the orders are being pronounced,

March, 2021has set in. Therefore, in the opinion of this

Court more than sufficient time was available with the State

to complete the enquiry. No material is available of any fraud

as on date in the cases of the petitioners. Petitioners' counsel

at one stage agreed that the petitioners have become so

desperate that they are prepared to accept any amount that is

immediately offered by the State.

There is also a Government Memo dated 05.11.2020,

which is filed along with the rejoinder. According to this

memo permission was granted to deduct 21% for DCC works

and 6.33% for MCC works and to make the balance payment

for other works having an estimated cost of Rs.5,00,000/-.

This has been followed by the State itself.

Therefore, in this batch of matters, after considering all

the above submissions the following order is passed:-

1) A period of two months is given to the respondents to

complete the pending enquiry in the case of the petitioners;

2)For all works upto Rs.5,00,000/- after deduction

of21.02% for DCC works and 6.33% for MCC works the

payment should be released within 30 days. If the enquiry

reveals that there are no deficiencies in the work for this

category of works the deducted amount should be released

and the grievance of the petitioners must be finally addressed;

3)In case of works above Rs.5,00,000/- a final period of

two months is given to the respondent / State to complete the

enquiries and to pass an appropriate order in each of these

cases addressing the grievance of the petitioners so that they

receive the entire payment due to them.

With these observations the Writ Petitions are disposed

of. There shall be no order as to costs.

Consequently, the miscellaneous applications, pending

if any, shall stand closed.

__________________________ D.V.S.S.SOMAYAJULU, J Date:16.03.2021 ssv